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Tranquilo Bay is set on the southern tip of Isla Bastimentos, one of the largest islands in the Bocas del Toro archipelago.

The island is largely undeveloped apart from a bustling town on its northern tip and a small Ngobe Bugle Indian village called Quebrada Sal or 'Salt Creek'. The area around the lodge is pristine and borders a national park which protects coral reefs, mangroves, cave systems, tropical islets, turtle nesting sites and large areas of pristine tropical rainforest.

Walking trails around Tranquilo Bay run through the forest which is home to striking poison dart frogs and insects which are unique to Bastimentos. The area around the lodge is also excellent for birdwatching, water sports and cultural visits to local communities.

Although this is mainly a place for those that like to be active and want to explore the area rather than relax, there are also some beautiful beaches just a motor-boat ride away.